If a Firm Increases Its Use of Financial Leverage,then What

question 2

Multiple Choice

If a firm increases its use of financial leverage,then what would we generally expect for the effect of that increased leverage to have on an EPS that is already very low?

• A) EPS would be lower with financial leverage
• B) EPS would always be the same with financial leverage
• C) EPS would be higher with financial leverage
• D) it is not possible to determine

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Definitions:

Brand Equity

The value and strength of a brand in the marketplace, often reflected in consumer recognition, preference, and loyalty.

Functional Benefits

are the practical or utilitarian advantages that a product or service offers to its users.

Consumer-Brand Connection

The relationship and emotional bond that develops between consumers and a brand, influencing loyalty and purchasing behavior.

Brand Equity

The value and strength of a brand that decides its worth, based on the consumer's perceptions of the brand's importance and identity.